Indian stock market at 1-month low on pre-budget nerves

Indian stock market at 1-month low on pre-budget nerves

Share prices slumped nearly two percent on Wednesday to their lowest close since the May 17 crash as investors sat on their hands ahead of the federal budget, due to be presented on July 8.

The 30-issue Bombay Stock Exchange index closed down 1.94 percent at 4,644.00 points, its lowest since May 17, when the index had closed at 4,505.16 points after the biggest intra-day fall of nearly 17 percent.

Declining shares outnumbered advancing shares nearly three to one in modest trade of 74 million shares, near recent averages. The broader National Stock exchange index fell 1.94 percent to 1,446.10 points.

"The trend is clearly bearish -- if buying doesn't pick up, even a little selling could trigger a depreciation and stocks could fall on their own weight," said Malay Sameer, an associate vice president of HDFC Securities.

"Valuations are cheap, but there is very little interest from local and foreign funds as everyone's cautious," he said.

Sentiment was also weakened by regional indices, which ended flat to lower, as they awaited direction from the U.S. ahead of an imminent interest rate hike and the June 30 handover in Iraq.

"There is a lack of confidence and (Indian) investors are unable to read what the budget has in store," said Dharmesh Mehta, head of broking at Enam Securities.

Foreign funds, in particular, are awaiting policy cues in the budget from the communist-backed government.

"Since institutions account for nearly a third of share volumes, and because there is no retail participation, the sell-off is dragging the index down," he said.

Index heavyweight Reliance Industries Ltd fell 4.8 percent to 411.05 rupees.

Investors sold banks, metals, oil refiners, auto makers and cement makers.

State Bank of India, the biggest commercial bank, fell 3.6 percent to 408.90 rupees. Private sector UTI Bank fell nearly three percent to 116.30 rupees. The outlook on the sector is negative on speculation of a possible local interest rate hike.

State-run Hindustan Petroleum Corp Ltd slipped 3.9 percent to 309.75 rupees. India's dominant energy firm, Oil and Natural Gas Corp, fell one percent to 615.90 rupees after it said on Tuesday its full-year profit fell 18 percent.

The shine came off metals, which had gained in recent sessions. Steel Authority of India Ltd, the biggest steel producer, fell 5.4 percent to 23 rupees and Hindalco, the biggest aluminium producer, fell 2.9 percent to 933.65 rupees.

Maruti Udyog Ltd, the biggest car maker, fell 3.2 percent to 364.70 rupees and Tata Motors Ltd, the biggest utility vehicle maker, fell 3.8 percent to 370.70 rupees.

Only drug issues, battered by last week's sector downgrade, made some gains.

Ranbaxy Laboratories Ltd added 1.1 percent to 888.05 rupees after it said it received $4 million from Schwarz AG for a molecule license.

Indian stock market at 1-month low on pre-budget nerves